Rupee continues fall against dollar after currency shortage
Analysts cite several reasons for Pakistani rupee's fall against US dollar; local unit closes at 217.66 in interbank market
August 23, 2022
- Pakistani rupee closes at 217.66 in interbank market.
- Local unit loses Re1 against US dollar.
- Analysts cite several reasons for rupee's fall.
KARACHI: The Pakistani rupee continued to lose ground against the US dollar during Tuesday's intraday trade in the interbank market as the country faces a currency shortage.
The local unit closed at 217.66 after losing Re1 against the greenback in the interbank market following a currency crunch, which according to analysts is taking place due to the new rules imposed by the United Arab Emirates, smuggling, and the lifting of the import ban.
The UAE has made it mandatory for Pakistani travellers to declare 5,000 dirhams at the airport when landing — leading to an increase in the price of the US dollar in the open market.
Economist and former adviser to the federal ministry of finance Dr Khaqan Hassan Najeeb said the rupee is slipping not only because of the dollar's global strengthening but also due to recent political developments — causing jitters in the market.
He also cited depleting foreign reserves held by the State Bank of Pakistan (SBP) as a reason for the fall. Forex reserves stand at $7.8 billion — hardly enough for over a month of imports.
Exchange Companies Association of Pakistan (ECAP) General-Secretary Zafar Paracha told Arab News that the local unit's fall — among other reasons — was due to its smuggling to Afghanistan, where sellers get higher rates.
Apart from this, the government's decision to lift the ban on the import of non-essential and luxury goods to meet a condition of the International Monetary Fund (IMF) is also gradually increasing the pressure on the rupee.
The ban was scrapped ahead of the Fund's executive board meeting, scheduled to take place in Washington on August 29, where Pakistan's request for the loan programme resumption will be taken up.
The market, however, seems to have failed to respond to the development of funds from Qatar.
In a briefing, Deputy Governor State Bank of Pakistan (SBP) Murtaza Syed said that Pakistan's funding gap of $4 billion will be fulfilled through $2 billion funds from Qatar, $1 billion from Saudi Arabia, and a similar amount from the UAE.
